"Let's Keep It All to Ourselves"... KRW 11.7 Billion Fine for Seven-Year 'Pallet Collusion'

18 Companies Prearranged Bidders and Bid Prices in 165 Tenders
Blocked Direct Deals with Nonghyup and Shared Profits through "Pass-Through Sales"

Manufacturers and distributors in the domestic logistics industry, which relies on plastic pallets as essential materials, have been caught engaging in organized collusion in the plastic pallet market for approximately seven years. To avoid competition, these companies not only prearranged successful bidders, but also devised a creative method called “pass-through sales,” where profits were shared with companies that cooperated in the collusion.

The Korea Fair Trade Commission announced on May 7 that it had uncovered collusive activities by 18 plastic pallet manufacturers and distributors in a total of 165 procurement bids conducted from September 2017 to April 2024. The commission decided to impose corrective orders and a total fine of KRW 11,737,000,000. The fines by company were highest for NPC at KRW 2,781,000,000, followed by Goldline Pallet Tech at KRW 2,609,000,000, and Korea Plastic at KRW 2,038,000,000. Sales related to the collusion amounted to approximately KRW 369.2 billion.

The companies involved in the collusion shared in advance the expected awardee, the role of dummy bidders, and the bidding prices in pallet purchase tenders held by major Korean conglomerates such as Lotte Chemical, S-Oil, and Hyundai Glovis. During this process, not only phone calls but also mobile messengers such as KakaoTalk were used as tools for collusion.

The dummy bidders assisted the predetermined winner by submitting bids at prearranged prices, and in return, the successful bidder shared a portion of the collusive profits, maintaining a symbiotic relationship.

Their collusion was not limited to bidding. Five pallet companies worked together in transactions with Nonghyup Agribusiness Group to ensure that a specific company could supply products exclusively. When individual agricultural cooperatives inquired about direct purchases, the colluding companies intentionally quoted higher prices, steering purchases toward the central channel of Nonghyup.

In particular, to prevent members from breaking away from the agreement, the companies used a unique “pass-through sales” method. After designating the final supplier and producer, the remaining participants issued tax invoices as intermediaries, creating fictitious transaction routes and splitting a margin of about 3% among themselves.

The Fair Trade Commission stated that this measure marks the first case of sanctions against collusion in the Korean pallet industry. The commission concluded that the extensive, long-term collusion led to higher pallet prices, ultimately increasing logistics costs for manufacturers and reducing consumer welfare.

The commission also stated, “We will strengthen monitoring of collusion that imposes unnecessary costs on companies and weakens the competitiveness of the industry,” adding, “Upon detection, we will respond firmly to restore a fair competitive order.”

This content was produced with the assistance of AI translation services.